RPM International Inc. reported financial results for its fiscal 2025 third quarter ended February 28, 2025. The company reported third-quarter sales of $1.48 billion, a decrease of 3.0% compared to the prior year. Third-quarter net income was $52.0 million, diluted EPS was $0.40, and EBIT for the quarter was $62.7 million.  

Frank C. Sullivan, RPM chairman and CEO commented, “The unfavorable weather conditions we discussed in early January continued and became more widespread as the third quarter progressed. Unseasonably cold weather in the southern U.S. and wildfires in the west reduced demand in geographies that typically have more construction and outdoor project activity in winter months. In addition to weather, we faced difficult comparisons to the third quarter of fiscal 2024, when adjusted EBIT was up 31%.”

He continued, “By prioritizing cash flow over profitability, we generated another quarter of strong cash flow as inventories declined $36 million versus last year. However, this disciplined inventory management, which is a key component of MAP 2025, also lowered production levels, which had a negative impact on fixed cost absorption in our seasonally smallest quarter. This, along with foreign currency headwinds and transitional costs from eight plant consolidations, pressured margins and more than offset MAP 2025 operational improvements.”

The third-quarter sales decline was primarily driven by unfavorable weather conditions, which reduced construction activity, and sluggish demand from specialty OEM manufacturing end markets. Foreign currency translation was also a headwind to sales.

Geographically, sales declines in North America were driven by adverse weather. In Europe, foreign currency translation offset growth generated by sales and marketing initiatives. Africa / Middle East declined slightly as it faced challenging comparisons to the prior year when sales increased 22.9%. The decline in Latin America and Asia / Pacific was driven by foreign currency translation headwinds and challenging comparisons to the prior year when sales increased 13.5% and 5.0% respectively.

Sales included a 1.8% organic decline, 0.5% growth from acquisitions net of divestitures, and a 1.7% decline from foreign currency translation.

The adjusted EBIT decline was driven by negative fixed-cost absorption from lower production levels, including disciplined inventory management to improve cash flow; foreign currency headwinds; and transitory costs related to MAP 2025 plant consolidations and start-ups. Corporate / other expenses also increased during the quarter, driven by higher M&A and compensation expenses. Additionally, comparisons to the prior year were challenging as adjusted EBIT increased 31.3% in the third quarter of fiscal 2024. MAP 2025 improvements and SG&A streamlining actions helped to offset the adjusted EBIT decline. The adjusted diluted EPS decline was driven by the reduction in adjusted EBIT.

Segment Sales and Earnings

For the Construction Products Group (CPG), net sales were approx. $473 million compared to approx. $496 million in the same period last year. The decline in sales was attributed to unfavorable weather conditions that limited construction and restoration activity, particularly in the southern and western United States. Foreign currency translation was also a headwind to sales. Sales included a 1.7% organic decline, 0.2% growth from acquisitions, and a 3.0% decline from foreign currency translation. Compared to the third quarter of fiscal 2024 when adjusted EBIT increased 69.8%, adjusted EBIT declined as lower volumes reduced fixed-cost absorption and, as part of MAP 2025, two different plant consolidations resulted in temporary inefficiencies as production was being transferred. These headwinds were partially offset by SG&A streamlining actions.

In the Performance Coatings Group (PCG), net sales were approx. $340 million compared to approx. $344 million during the same period last year. Organic sales declined slightly compared to strong growth in the prior year when organic sales increased 9.2%. Fiberglass-reinforced plastic structures grew double digits, driven by demand from data centers, while other businesses declined modestly as they faced challenging prior-year comparisons. Sales included a 0.3% organic decline, a 1.1% increase from acquisitions net of divestitures, and a 1.6% decline from foreign currency translation. Compared to the third quarter of fiscal 2024 when adjusted EBIT increased 45.1%, adjusted EBIT declined as lower fixed-cost utilization from reduced volumes, plant start-up costs, and negative foreign currency translation more than offset MAP 2025 improvements.

In the Specialty Products Group (SPG), net sales in the third quarter were $159 million, compared to $176 million in the same period of 2024. The sales decline was primarily due to lower demand in specialty OEM end markets and the disaster restoration business, which was impacted by reduced remediation activity. This was partially offset by growth in the food coatings and additives business, which benefited from a prior acquisition. Sales included a 10.9% organic decline, 1.4% growth from an acquisition, and a 0.6% decline from foreign currency translation. The adjusted EBIT decline was driven by lower fixed-cost utilization from reduced volumes, as well as additional expenses at the new resin and innovation centers of excellence that SPG manages on behalf of all RPM segments. MAP 2025 benefits and SG&A streamlining actions partially offset these earnings headwinds.

Net sales in the Consumer Group during the quarter were approx. $504 million, compared to approx. $507 million in the same quarter in 2024. The modest growth in organic sales in the Consumer Group was driven by new product introductions and market share gains. This organic growth was offset by foreign currency translation headwinds. Sales included 0.3% organic growth and a 1.0% decline from foreign currency translation. Adjusted EBIT declined as MAP 2025 working capital efficiency initiatives resulted in lower production and fixed-cost utilization. The segment also experienced raw material inflation and challenging comparisons to the prior year, when adjusted EBIT grew 34.6%.

Looking forward, Sullivan commented, “As we look toward the fourth quarter, macroeconomic conditions are challenging, but we are seeing pockets of positive momentum and are leveraging our focus on repair and maintenance in both construction and consumer end markets. As demonstrated in prior economic cycles, the ability of our products and services to extend asset life becomes even more attractive to end users when budgets are tight. Additionally, RPM associates continue to implement initiatives to outgrow our markets, including new product introductions, and achieve efficiency improvements. We anticipate that this will result in modest earnings growth in the fourth quarter with the financial benefits of MAP 2025 becoming even more evident when sustained volume growth returns.

“While the tariff situation is dynamic, most of our businesses have limited cross-border trade for raw material procurement and finished good sales. This helps mitigate the effects of tariffs; however, we are not immune, and we assume that raw material inflation will increase from low-single-digits to mid-single digits as a result of currently known tariffs. Our guidance does not assume any impact from the acquisition of The Pink Stuff since it is expected to close late in the fourth fiscal quarter of 2025 or early in the first quarter of fiscal 2026.”

The company expects the following in the fiscal 2025 fourth quarter: consolidated sales to be flat compared to prior-year results; CPG sales to be flat compared to prior-year record results; PCG sales to increase in the mid-single-digit percentage range compared to prior-year results; SPG sales to decline in the low-single-digit percentage range compared to prior-year results; and Consumer Group sales to decline in the low-single-digit percentage range compared to prior-year results.

Learn more about RPM at www.rpminc.com.